As a Roman Legionary, you were given three promises:
You would get to see the world
You would have had one quarter of your pay withheld to provide you with a retirement income after 25 years’ service.
You could even look forward to a relaxing life in towns like Florence which was established by Caesar as a settlement for his veteran soldiers.
And that was the birth of retirement planning!
Scroll on two thousand years. Employees of British Airways were made similar promises: you could travel the world and in addition to a salary, a pension would be provided at retirement.
On the 31st March 2018, the British Airways final salary scheme was closed and has been replaced with an investment linked scheme. The old scheme became too expensive to manage. The estimated shortfall which runs into many billions of pounds will be filled by an estimated £300 to £450 million a year until 2027. In the FT (September 2017) it was stated that the cost of keeping the scheme open was equivalent to 45% of the salary roll, roughly 4 times the cost of managing similar more solvent schemes.
The closure of the scheme has affected over 17,000 staff that will now be faced with a number of very important questions which will all require serious consideration and professional guidance.
It is fair to say that in some cases, early retirement or normal retirement may be the answer. For many, remaining in the scheme is probably the right course of action – but for some, the merits of transferring to an alternative arrangement may be preferential for their individual circumstances.
As Chartered Financial Planners and being independent, we have the professional expertise to guide BA members through this complex area to help them make the best decision for their individual circumstances. We have an extremely robust review service which can incorporates a number of analytical tools including cash flow forecasting.
In short, we are here to help and if you are a member of the scheme or know anyone who works for BA then please ask them to contact us for a complimentary initial consultation.